A conservative banker

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The Westchester Tease 

November 08, 2005

A conservative banker

Chris Palmeri

Doreen Woo Ho, chief of Wells Fargo's home equity loan business, stopped by the office yesterday. Wells is the largest home equity lender in the nation with some $71 billion in loans. There's a lot of reason to believe mortgage lenders have been too aggressive in lending money to people who might not ultimately be able to afford their homes. Wells, Doreen notes, has avoided a lot of the more controversial mortgages, such negative amortizating loans that allow borrowers to roll some of their monthly interest payments over on to principal. Avoiding those controversial loans may be costing Wells business. The number two mortgage lender overall, Wells saw its loan volume shrink 12% in the second quarter, according to the trade publication National Mortgage News. Industry leader, Countrywide Financial, saw its business jump 20% during the same period. With rates on the rise, Doreen's encouraging home equity borrowers to lock in their payments with fixed-rate loans. The company's SmartFit product, for example, is a fixed-rate loan that acts like a line of credit, in that customers only have to pay interest on the amount that they draw down. Doreen says 60% of Wells' home equity customers are now in fixed-rate products, a complete flip from last year when the majority were in variable loans. Variable loans are better for banks in a rising rate environment, because they make more money when rates rise. But fixed-rate products may ultimately be better for borrowers, which is why Doreen is a mortgage banker who's thinking long term about her customers' best interests.